Capgemini Consulting Digital Transformation Review No. 5

Capgemini Consulting's digital transformation business journal looks at the digitization of operations, taking in robotics, 3D printing, and the second machine age, as well as opinion and insight from guest contributors including Neelie Kroes, Vice President of the European Commission. Read the full review to find out more or join the conversation on twitter #DTR5

5.
Digital Transformation Review Editorial
Digitizing Operations – The Unclaimed Prize
Introduction By Capgemini Consulting’s Editorial Board
Digital transformation today is pervasive across
organizational functions. There is no area within a
company where digital has not made its impact felt.
Nevertheless, most organizations have largely focused
on the ‘shinier’ parts of digital transformation –
namely the front-end and the customer-experience.
The reasoning behind this has been pretty
straightforward – customers see, interact and engage
with the front-end organization. And organizations
cannot be seen as lacking the digital prowess of their
competition. However, in maintaining this focus,
many organizations have neglected the benefits
that digital technologies can bring to an area that
is usually hidden from the customer’s view –
operations. Indeed, our research with the MIT Sloan
Management Review suggests that only 26% of
organizations use digital technologies to automate
Figure 1: The Digitization of Operations Has Been
Neglected by Most Companies
their operational processes (see Figure 1). In this
Digital Transformation Review, we shine a muchneeded spotlight on this neglected area, canvassing
the views of thought leaders, academics, and the
senior teams of companies that are determined to
seize the digital operations prize.
When we say organizations have neglected
digitization of operations, what do we mean
exactly? What are the key digital technologies that
organizations should leverage but are not doing
currently?
There is no room for complacency in
the fast-moving digital world.
- Neelie Kroes
43%
40%
40%
30%
Enhance existing Improve
products
customer
and services
experience
Expand
reach
Launch new
products
and services
Automate
operational
processes
Source: Capgemini Consulting – MIT Sloan Management Review,
“Embracing Digital Technology: A New Strategic Imperative”, 2013
6
Andrew
McAfee and Erik
Brynjolfsson, from
Academics
26%
the MIT Center for
Digital Business, are
a good place to start
for answering this question. They are on the verge
of releasing their next book on the second machine
age – an era when machines are now able to take
over a lot of cognitive tasks that humans can do. Erik
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6.
Editorial Digital Transformation Review
and Andrew have identified Big Data and Machine
intelligence/ Robotics as powerful technologies that
organizations should closely track and implement.
Erik and Andrew have a strong vision for the brave
new world offered by these technologies, stating:
“The second machine age will have greater impact
than even the first industrial revolution.”
Robots have always conjured up images of a
humanoid serving coffee, but, silently, they have
been revolutionizing several areas of manufacturing
operations. And who better a
person to vouch for this than
Per-Vegard Nerseth, Head
of Robotics at ABB. ABB Robotics
has already shipped over 200,000
robots worldwide, and Per-Vegard
gives us an in-depth view of robots,
humans, jobs and impact on operations. An area
closely linked to robotics is 3D printing.
The Second Machine Age will have
greater impact than even the first
industrial revolution.
- Andrew McAfee and
Erik Brynjolfsson
While an open-source 3D printed
robot might still be some time away,
many organizations are already
deploying 3D printing to drive
key elements of their operations.
David Reis, CEO of Stratasys,
one of the biggest 3D printing
companies globally, is a key industry thought leader
who expounds on the implications of this digital
technology for manufacturing industries.
Big Data analytics has come into its own in the last
couple of years. While overall adoption has been low,
however, the intent to invest in it continues to rise
steadily.
However, investments speak only to one side of the
story. Big Data delivers big results only when it is
used to transform operations. And this is exactly what
three organizations that we identified have done.
With a delivery volume of 4.1 billion packages
across 220 countries, UPS faces a logistical challenge
the scale of which Big Data analytics loves. And
the company rightly recognized that. We spoke
to Jack Levis, Director of
Process Management at UPS,
to understand how Big Data analytics
is helping them get the most bang for
every buck spent on fuel. He should
know. The deployment of descriptive
and predictive analytics systems
several years ago enabled UPS to reduce 85 million
miles driven per year.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
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Digital Transformation Review Editorial
There are common misconceptions on how public
sector authorities in many countries are typically
behind industry-leading private sector organizations
in their adoption of the latest technologies. Clearly,
HM Revenue and Customs – the UK tax authority –
is out of this club. The department is one of the early
adopters of Big Data analytics in order to combat
tax and welfare fraud. HMRC has seen extremely
strong results from adopting Big Data. They invested
around £45 million over five years in a Big Data
solution. As of April 2013, it enabled
the department to uncover fraud
worth over £2.6 billion. No wonder
Mike Hainey, Head of Data
Analytics at HMRC, wants to now
use Big Data analytics in newer
areas such as improving customer
experience and end-to-end lifecycle of customer
handling.
By now, if you thought Big Data analytics is only useful
for driving corporate efficiency
goals, you could not be further from
the truth. The key advantage of Big
Data analytics is that it thrives with
data, and it does not differentiate
one dataset from the other. And this
is more than amply demonstrated
when Anant Agarwal, President of edX,
says, “Our objective is to improve the learning
experience on campus by understanding how people
learn.” edX is a not-for-profit organization, founded
by Harvard and the MIT in May 2012, which aims
to expand access to education for everyone while
improving educational outcomes on campus and
online by using Big Data analytics.
As these companies showed, Big Data can indeed
bring a step change in operations. Consequently,
the usage of Big Data is expected to keep rising. It is
estimated that over 4.4 million IT jobs will be created
around Big Data by 20151. However, do companies
have these skills? Evidence seems to suggest the
answer is no (see Figure 2).
Figure 2: Knowledge/Understanding of Big Data
21%
Respondents working
in IT or Business
Intelligence-related roles
Respondents working
in other roles
Source: E-Skills UK, “Big Data Analytics: Adoption and Employment
Trends 2012-2017”, November 2013
Having talked to several industry leaders about the
use of digital technologies in operations, we then
decided to investigate the digitization of operations
in a specific function and in a sector in more detail.
We looked at the digitization of supply chains as well
as banks’ back offices. The results, unfortunately,
Gartner, “Gartner Says Big Data Creates Big Jobs: 4.4 Million IT Jobs Globally to Support Big Data By 2015”, October 2012
1
8
33%
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Editorial Digital Transformation Review
validate the view that organizations who are tackling
digital operations seriously are in a minority.
For many organizations, some of the most
complicated parts of their operations typically lie
in their supply chains. But are organizations doing
enough to use digital technologies to transform their
supply chains? It seems not. We conducted a survey
of global supply chain organizations and the results
should start worrying CxOs. Over 65% of companies
have not started or have only partly framed a digital
vision and strategy for supply chain. And there
is more. Over 57% of supply chain organizations
acknowledged a competency gap in their people
abilities on digital technologies.
Banks around the world can fall prey to the focus on
the digital front-end – concentrating an inordinate
amount of effort on front-end customer-facing digital
innovations. But when it comes to the back office,
they continue to rely on decades-old legacy systems
that have received a steady stream of complicated
additions. Indeed, if banks wish to continue offering
customers a more enhanced and differentiated digital
experience, then the time to digitize their back offices
is now.
And finally, digital transformation, be it of the
customer experience, operations or business model, is
not just for companies. The world around us is rapidly
becoming digitized and government authorities
around the world have as much digital responsibility,
if not more, than CEOs. And one of
the strongest supporters for digital is
Neelie Kroes, Vice President
of the European Commission,
leading the flagship Digital Agenda
for Europe program. Neelie Kroes
exemplifies the importance of digital
when she says, “There is never room for complacency
in the fast-moving digital world”.
At Capgemini Consulting, we are firm believers in the
power of digital transformation. We strive to share
the best thinking on digital and highlight some of the
thoughts and views of digital leaders from around the
world. We hope you find this edition of the Digital
Transformation Review insightful and thoughtprovoking. We look forward to hearing from you
on the channel you prefer – digital or not. Happy
reading.
For more information, please contact:
Digital Transformation: Didier Bonnet (didier.bonnet@capgemini.com, @didiebon)
Digital Banking: Jean Coumaros (jean.coumaros@capgemini.com)
and Phil Falato (phil.falato@capgemini.com)
Digital Supply Chain: Mathieu Dougados (mathieu.dougados@capgemini.com)
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
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Digital Transformation Review The Second Machine Age: An Industrial Revolution Powered by Digital Technologies
The Second Machine Age: An Industrial
Revolution Powered by Digital Technologies
rik Brynjolfsson is the Director of the MIT Center for Digital Business
and Andrew McAfee is a Principal Research Scientist at the Center. Erik
and Andrew are widely-acknowledged thought leaders on technology
evolution and co-authors of the 2011 book, “Race Against the Machine: How
the Digital Revolution is Accelerating Innovation, Driving Productivity, and
Irreversibly Transforming Employment and the Economy”. They have now
written a new book, “The Second Machine Age: Work, Progress, and Prosperity
in a Time of Brilliant Technologies”, which is scheduled for release in early
20141. We spoke with Erik and Andrew to understand their thinking on digital
technologies, how they are likely to evolve, and what this means for individuals,
society and organizations.
Interview with Erik Brynjolfsson and Andrew
McAfee, MIT Center for Digital Business
Technology in Top Gear
Erik Brynjolfsson Andrew McAfee
Director of the MIT Center
for Digital Business
1
Principal Research Scientist
at MIT Center for Digital
Business
What is the core premise of the “The Second Machine Age”?
There have been two big turning points in human history. The first was
the industrial revolution, where machines replaced muscle power. The
Second Machine Age is the time when machines are now able to take
over a lot of cognitive tasks that humans can do. It started roughly
around the time IBM’s Deep Blue computer in 1997 beat Gary Kasparov
in a chess match. That year also witnessed median incomes peak in the
United States, and a subsequent rise in productivity. The Second Machine
Age will be a bigger transformation and have greater impact than even
the first industrial revolution.
http://www.amazon.com/The-Second-Machine-Age-Technologies/dp/0393239357
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The Second Machine Age: An Industrial Revolution Powered by Digital Technologies Digital Transformation Review
The Second Machine
Age is the time when
machines are now
able to take over a lot
of cognitive tasks that
humans can do.
What are the defining
characteristics of this Second
Machine Age?
We see three defining trends in
the Second Machine Age.
The first is an exponential
improvement in computational
p o w e r, c o m m u n i c a t i o n s
technologies, data storage and
even software. Some technologies
are even improving faster than
Moore’s law (Moore’s law is
the observation that, over the
history of computing hardware,
the number of transistors on
integrated circuits doubles
approximately every two years).
The second characteristic of
this age is the digital nature
of core technologies. Digital
technologies have unusual
economics compared to the
economics of atoms – they
can be copied at virtually
zero cost, transmitted almost
instantaneously and resultant
copies are perfect, identical copies
of the original. The idea that you
can perfectly replicate goods for
free, obviously leads to some very
unusual economics compared to
the “textbook” perception. An
increasing number of industries
have software at their core and,
therefore, are characterized by
these economics of digitization.
The third characteristic is
the combinatorial nature of
innovation. Digital innovations
can be combined and recombined
to create even more value. And
that’s a very encouraging thing;
a larger base of inventions means
an even larger set of raw materials
for the next wave of innovations.
This is very unlike traditional
inputs that yield diminishing
returns.
The Second Machine
Age will have greater
impact than even
the first industrial
revolution.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
New Digital
Technologies, the
Industry and the
Neglect of Operations
From an industry perspective,
what are the key technologies that
organizations should keep a close
eye on?
We believe companies should pay
close attention to two areas when it
comes to technology development
– machine intelligence and the
global network of people and
machines.
Machine intelligence is the
idea that by including different
combinations of digital
technologies, we can now allow
machines to do cognitive tasks
that they could never have done
before. Take language and voice
recognition. For the very first
time in history, we can talk to
our machines and have them
understand what we are saying
and carry out our instructions.
People have been working on
language, motor control and
problem solving for decades.
However, very little progress had
been made until just the past
5 or 10 years, which is when
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Digital Transformation Review The Second Machine Age: An Industrial Revolution Powered by Digital Technologies
things started picking up very
rapidly. And part of that is due
to the exponential improvement
in technologies, in particular the
power of Big Data.
Similarly, robotics has greatly
improved in recent times and
robots today are good with both
gross and fine motor control.
Take the example of Baxter – a
two-armed robot that operates
at an hourly rate of just $4! Or
consider Google’s self-driven car.
A few years ago, it would have
been impossible to imagine that
machines could even accomplish
something like this. But today,
we have crossed that threshold.
And finally, machines have
become remarkably good at
solving unstructured problems.
An example of that is what IBM’s
Watson did with the TV show
“Jeopardy”. The supercomputer
defeated two of the show’s
greatest champions. Watson is
now being applied at call centers,
for legal advice, investment
advice, medical diagnosis, and
many other kinds of unstructured
problems.
The other key area that we believe
holds great potential for both
organizations and the society
at large is the networking of
all people on the globe. For the
first time in history, we are
14
networking together billions
of brains, all the humans on
the planet, to solve problems. In
the past, only a relatively small
share of humanity was engaged
in problem solving. In the coming
decades, almost all of humanity
can be partners in this problemsolving enterprise. And that will
multiply the opportunities for
invention and innovation and
creativity, disproportionately, and
will also lead to a big acceleration
in the rate of inventions.
Organizations need to tap into this
massive source of brainpower.
We believe
organizations should
focus on leveraging
technologies around
machine intelligence,
big data and connected
networks.
To summarize, we believe
organizations should focus on
leveraging technologies around
machine intelligence, big data
and connected networks.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
From our research, we found very
few companies are exploiting
new digital technologies in their
operations. What is your take on
this?
Indeed, we think that is the most
important challenge before us –
despite technology rushing ahead,
our organizations, societies and
governments are not adapting
rapidly. One of the key issues is
that CXOs don’t fully appreciate
and understand the power of
these new technologies. Many
don’t even realize that they are
in the midst of this tidal wave
of change. There are some who
realize it though. However, they
don’t know what to do next. And
finally, for those that initiate
change, the big challenge is in
making that change. So, for
all those reasons, we’re faced
with lagging organizations and
institutions.
CXOs don’t fully
appreciate and
understand the power of
these new technologies.
Many don’t even realize
that they are in the
midst of this tidal wave
of change.

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The Second Machine Age: An Industrial Revolution Powered by Digital Technologies Digital Transformation Review
Jobs, Skills and Wealth
in the Second Machine
Age
Looking forward, what is your
view on the impact of digital
technology on the economy?
If you look at society as a whole,
there is a secret about economics
that people used to prefer to
ignore. However, we cannot brush
it under the carpet anymore.
When a technology increases
wealth, there is no guarantee that
this abundance will be shared
evenly (or even that people will
secure any share of it). It’s possible
that some people would be made
worse off, not just in relative
terms, but even in absolute terms.
And, unfortunately, since about
the late 1990s, that’s what’s
happened, not just in the United
States, but in almost every OECD
country: in France, in Japan, even
in Sweden. Inequality has grown
significantly and the median
worker has not kept up, and in
many cases has fallen behind.
While there are many causes,
three of the most important ones
are the way technology creates
winners and losers, between
high skill vs. low skill workers,
between capital and labor, and
between superstars and everyone
else. Increased inequality is not an
inevitable outcome of technology,
but a combination of technology
and the state of our current
institutions. The challenge ahead
of us is to rethink our institutions
so that we get more people
participating. We’re optimistic
that this can be done, but it’s not
going to happen automatically.
We cannot stop
technology from
destroying jobs.
The solution is to
harness technology to
simultaneously create
new and different jobs.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
In “Race Against the Machine”,
you argued that digital
technologies were destroying a
sizeable chunk of jobs. Do you
still share this view?
As we’ve said, and shown, in our
first book, digital technologies are
going to automate and eliminate
millions of jobs, even as digital
creates other jobs. And this trend
will continue. In fact, technology
has always been destroying jobs
and has always been creating
jobs. The solution is not to try to
stop technology from destroying
jobs. The solution is to harness
technology to simultaneously
create new and different jobs.
In the year 1800, over 90% of
Americans worked in agriculture,
on farms; by 1900, it was 42%;
and today, it’s less than 2%. All
those jobs in agriculture have
been eliminated, but those people
didn’t become unemployed.
Instead, they found work in new
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Digital Transformation Review The Second Machine Age: An Industrial Revolution Powered by Digital Technologies
industries, from automobile
production to software creation.
Unfortunately, in the past 15 years,
the job destruction has continued,
but we have not created new jobs
and new industries equally fast.
We need to invent
ways of racing with the
machine, not against it.
How can individual and
organizational skills be upgraded
to compete in the Second Machine
Age?
We have to transform our skills as
we always did in the past, but we
have to do it even faster. We have
to start with education. You can
think of humans as being engaged
in a race between education and
technology for much of the
past two centuries. Sadly, the
education industry has been one
of the slowest ones to incorporate
technology. We are optimists,
so we actually see that as good
news – it means we have a lot of
potential for improvement. The
future looks bright because we
are nowhere close to harnessing
the true potential of technology in
education.
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The education industry
has been one of
the slowest ones to
incorporate technology.
What is the best way to resolve
the growing concern over loss of
jobs and the economic divide?
We need to fix this. We need to
invent ways of racing with the
machine, not against it. Earlier we
talked about the example of Chess
and how Deep Blue defeated
Gary Kasparov in the World
Chess Championship. The World
Chess Champion today is not a
machine. And it’s not a human.
The best chess player is a team of
humans and computers working
together. A team of humans
and computers can defeat any
computer or any human working
alone. And that underscores the
point that humans and computers
have complementary and distinct
skills and capabilities that,
when they work together, can
be more powerful than they are
individually.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
What are some areas where
technology can be used to
improve education?
In this context, Massive Open
Online Courses (MOOCs) have a
major role to play. MOOCs can
do two big things. First, they
can replicate the best teachers,
methods, course materials to
thousands or even millions of
people, just as we saw in media,
entertainment, software and other
industries. Second, and more
importantly, the digitization of
education creates opportunities
to apply Big Data analytics to
better measure student patterns
and behavior online. Key insights
obtained from such analysis can
be used to enhance the quality of
education. (For more information
on how MOOCs are transforming
education, please refer to our
interview with Anant Agarwal,
President of edX on page 44 –
a not-for-profit organization
founded by Harvard and the MIT.)
We are going to see the
rise of many new types
of organizations; one
example is what we call
‘micro-multi-nationals’.

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The Second Machine Age: An Industrial Revolution Powered by Digital Technologies Digital Transformation Review
Visualizing the Digital
Future
Does growing machine
intelligence and the fact that
everybody is networked lead to a
new type of digital organization?
Yes, we are going to see the rise of
many new types of organizations.
One example is what we call
‘micro-multi-nationals’. Today,
half a dozen people can market
and distribute their products and
services to the entire world through
the Internet instantaneously.
That is something we’ve never
seen before in history. And they
will network together with other
micro-multi-nationals, with
medium-sized companies and
with big companies to coordinate
production. You can have what
we call ‘scale without mass’ –
basically companies that reach
globally, but have relatively
few employees. Facebook or
Instagram are examples of such
companies.
But that is only one part of future
organizational evolution. For
instance, the digitization of the
economy that we talked about
earlier is leading to much lower
marginal costs, and that inherently
creates enormous economies of
scale. There are also tremendous
network effects, which also would
create demand-side economies
of scale. Those tend to favor big
companies like Google and Apple
and other companies that have
global reach. There will be many
different types of winners in the
Second Machine Age.
What is the key takeaway that
you want organizations and
individuals to bear in mind as
they prepare themselves for the
Second Machine Age?
The pace of technology
development is going to continue
to accelerate exponentially. More
cognitive tasks will be automated
and done by machines. The last
ten years were pretty rough. The
next ten years will be even more
disruptive.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
If organizations and individuals
just go on autopilot and don’t pay
attention, we could easily end up
with a society with a tremendous
concentration of wealth and
income. Then, it will not be the
1%, but the 1% of the 1%, the
one-hundredth of one percent,
that ends up with superstar
incomes; but the majority of
people will not participate in that
global abundance, A ‘digital elite’
will thrive in the Second Machine
Age. The rest would be left behind
unless they are quick to learn new
technologies and work “with” the
machines.
The continuing advances in
technology are in some ways
easy to predict. But the way our
organizations and individuals
respond – that is a choice, not a
predetermined outcome. As we
say in our book, technology is not
destiny; we shape our destiny. We
can make the choices based on
our values. We need to make the
right ones.
The last ten years were
pretty rough. The next
ten years will be even
more disruptive.
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Digital Transformation Review Rise of the Automatons: ABB and the Evolution of Robotics
Rise of the Automatons:
ABB and the Evolution of Robotics
BB is a leading manufacturer of industrial robots and robot systems,
operating in 53 countries. Key markets include automotive, plastics,
metal fabrication, consumer electronics as well as food and beverage
industries. ABB has shipped more than 200,000 robots worldwide. Capgemini
Consulting spoke to Dr. Per-Vegard Nerseth, Group Vice-President and Head
of Robotics at ABB to understand more about robotics, their evolution and
impact on operations.
Interview with Dr. Per-Vegard Nerseth,
Group Vice-President and Head of Robotics at ABB
Robotics Industry in Context
How has the robotics industry performed in the last few years?
Dr. Per-Vegard Nerseth
Group Vice-President and Head of Robotics at ABB
Western countries are
looking at automation
as a way to compete
more effectively against
low-cost manufacturing
countries.
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For many years prior to the global financial crisis, the robotics market was
fairly small at roughly 100,000 units. The market was driven primarily
by the automotive industry and growth was relatively flat. The industry
was badly affected during the crisis. Sales fell by nearly, 30-40% and
the market declined to about 67,000 units. Since the crisis, however, the
robotics market has grown strongly. During 2010 and 2011, the market
recovered to above pre-crisis levels. According to the International
Federation of Robotics (IFR), the global robotics market stood at close to
160,000 units in 2012. I expect the market to continue to grow strongly
going forward.
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Rise of the Automatons: ABB and the Evolution of Robotics Digital Transformation Review
China is the most
rapidly growing market
for robots in the world.
What is driving this dramatic
growth in the robotics market?
Companies need to increase
productivity and efficiency, both
in mature as well as developing
markets. Western countries are
looking at automation as a way to
compete more effectively against
low-cost manufacturing countries
as well. There are two reasons for
this – rising labor costs and high
labor turnover rates. Labor costs
in China are rising at 10-15% a
year. As a result, the traditional
cost advantage that China
enjoyed compared to the western
world is shrinking. And this is
true for other emerging markets as
well. These countries are looking
at robotics and automation to
maintain their competitiveness.
China, in fact, is the most rapidly
growing market for robots in the
world. Between 2005 and 2012,
sales of industrial robots in China
have grown by about 25% per
year on average.
High labor turnover rates are also
contributing to the increasing
use of automation in emerging
economies. The consumer
electronics and food and beverage
industries, in particular, struggle
to maintain a stable workforce.
Certain Chinese factories have to
manage employee turnover rates
of up to 5% a month. The cost
of replacing employees, which
includes recruitment and training
costs, can be quite high. This has
become one of the key drivers of
automation.
The cost of replacing
employees has become
one of the key drivers of
automation in China.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
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The Glob State of Robot Penetration
Global
The global average
robot density* in 2012 = 58
80
68
Europe
US
Japan, Germany, Korea
and the US – have the highest
robot densities.*
The automotive industry accounts
for the highest share of automation
47
Asia
Korea
Japan
Germany
396
332
273
Among non-automotive industries,
the 2 prominent growth markets
for robotics are :
Japan has the
highest robot density
for the automotive sector:
1,562
units
per
10,000
employees
Food and
beverage
*Robot Density: measured as the number of robots per 10,000 employees
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and
Electronics
industries

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Rise of the Automatons: ABB and the Evolution of Robotics Digital Transformation Review
The Beneﬁts and
Challenges of
Automation
What are some of the key benefits
secured by companies that have
deployed robots?
The cost and efficiency benefits
of using robots can indeed be
quite significant. This is more so
when companies are running high
volume productions. A single
robot, for instance, can replace
several workers on a production
line, which brings down operating
costs. At the same time, a robot
can work faster and with greater
efficiency. Franklin Bronze &
Alloy Inc. is a U.S-based producer
of ceramic shells that has used
robots to dramatically reduce
costs and increase efficiency.
The use of robots has helped the
company cut man-hours from 56
hours a day to 32, while increasing
daily production from 140 to 200
parts.
The other key benefit of using
robots is higher product quality.
A robotized solution can reduce
rework, scrap rates and material
usage, while delivering higher
and more consistent quality
levels. In a car paint job, for
instance, achieving uniform
thickness through manual
painting is difficult due to the
human tendency to overspray. A
manual paint job for a car usually
utilizes 20-30% more paint
compared to robotized painting.
This means lower quality levels
and substantially higher costs.
Another benefit of investing
in robots is increased worker
safety and improved working
conditions. Robots can perform
tasks involving hot, dusty or
hazardous conditions that would
be difficult and dangerous for
humans.
A manual paint job for
a car usually utilizes
20-30% more paint
compared to robotized
painting.
What are some of the challenges
in increasing the penetration of
robots in the EU or US?
There are two challenges that I
believe the industry will need
to address. The first challenge
is to find ways to make robots
easier to use. The automotive
industry has had a long history
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
of using robots and as a result, it
has built a skilled workforce that
can program and manage robots.
But for industries that are new to
automation, programming robots
can be a challenge. We need to
find ways to make robots easier
to use so that they do not require
a very highly skilled workforce to
operate. Ease of use is going to be
crucial to drive penetration.
The other issue that will need to
be addressed is that of safety. The
industry is looking at ways to
make robots work more closely
with human beings, so that they
can actually collaborate. Today
there are very strict safety rules
for robot operations and robots
are required to be caged in. But if
we want to have a robot working
alongside human beings on a
production line, we will need to
make robots that are safer to work
with.
We need to find ways
to make robots easier to
use so that they do not
require a very highly
skilled workforce to
operate.
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21.
Digital Transformation Review Rise of the Automatons: ABB and the Evolution of Robotics
Robots, Digital Skills
and Jobs
Does the increasing use of
automation pose a serious skills
issue for companies? Do you see
a skills gap becoming a hurdle for
manufacturers?
I do see this as a challenge for nonautomotive industries, like the
food and beverage and electronics
industries. Unlike the automotive
industry, these industries do
not have in-house expertise
in programming and handling
robots. I think the solution would
be for the robotics industry to
develop robots that are easier
to use, as I mentioned earlier,
because I think in the future
we will increasingly serve new
customer segments with different
skill levels and needs compared to
the automotive industry.
The industry is looking
at ways to make robots
work more closely
with human beings, so
that they can actually
collaborate.
22
We are seeing a shift
in mindset among
companies toward
moving production back
onshore.
Do you think that robots can
help the US and Europe bring
manufacturing production back
onshore?
Yes I do think that is a possibility.
A few years back the focus was
on shifting manufacturing to
locations that offered the lowest
production costs. But today,
we see growing concern about
landed costs and the impact
of import duties. We also see
a growing need for delivering
products at the same time across
geographies. These factors are
driving a shift in mindset among
companies toward moving
production back onshore. Some
leading electronics companies
have openly announced that they
have already “reshored” some
manufacturing work. And we
are seeing this trend not only in
customized production but also in
mass production.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
What are your thoughts on
the impact of automation on
employment? Do you agree
with arguments that say that
increasing automation has led
to a jobless growth?
No, I do not agree. In fact,
the International Federation
of Robotics (IFR) published a
report last year that shows that
countries that invested heavily
in automation between 2000
and 2011 actually saw a drop
in unemployment. The number
of jobs that have been created
is far greater than the numbers
lost due to automation in
manufacturing. This is because
companies that have invested in
automation are producing more
and expanding and entering new
markets. As a result, they have
had to employ more people in
new downstream functions like
sales and distribution. The IFR
estimates that 300,000 to 500,000
downstream jobs have been
created due to the use of robots
during 2008-2011.
300,000 to 500,000
jobs have been created
due to the use of robots.
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22.
Rise of the Automatons: ABB and the Evolution of Robotics Digital Transformation Review
Looking Ahead
There has been a lot of talk around
collaborative robots. What is ABB
doing around that and what do
you think is their future?
ABB has developed a Dual-Arm
Concept Robot (DACR) that is
designed to work on a production
line in the electronics industry,
alongside human coworkers. This
DACR is designed in such a way
that it is intrinsically safe which
means it cannot hurt a coworker.
It uses force-sensors to detect
changes in the force applied to
it. When it comes in contact with
a human being, it safely stops. It
has padded arms which ensure
that it is completely safe.
ABB’s DACR is also designed
to increase the flexibility and
agility of manufacturing systems.
Since it is compact, portable and
designed to take the same working
space as a human, it can easily
be interchanged with a human
coworker. The DACR can be easily
trained on a process and placed
on a production line in place of
human workers. This allows a
manufacturer to adapt quickly to
changes in production schedules.
It can also be dedicated to tasks
where human workers may be
required to work in confined
spaces.
I do think that the use of such
collaborative robots will grow
significantly in the future.
But safety will be vital for
collaborative robot operation
since the robots will need to work
in close contact with humans.
What are your views on the
evolution of connected robots?
I believe the future of robotics
is closely tied to two aspects
of connectivity that the entire
industry is focusing on.
The first relates to the application
of connectivity to remotely
monitor robots. For instance, the
ABB Remote Service solution
is being used to monitor robots
remotely in real time, using
biosensors. The solution helps
to proactively identify potential
issues so that they do not disrupt
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
normal manufacturing operations.
For instance, it helps us detect if a
robot is in need of service or an
upgrade. The customer can then
choose to have the issue resolved
over the phone or by having a
technician visit the production
plant. This helps us better support
our customers in running troublefree manufacturing with no loss
of production time.
The market for
consumer robots has not
taken off in the way it
was expected.
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23.
Digital Transformation Review Rise of the Automatons: ABB and the Evolution of Robotics
The other aspect of connectivity
relates to telerobotics that opens
up several new applications for
robots. Remotely controlled or
telecontrolled robots can be
used to perform complex or
dangerous functions that would
ordinarily be performed by
humans. For instance, working
on an oil platform requires a lot
of training and also involves
safety hazards. Remotely
operated robots equipped with
vision technology can be made
to perform actions such as
the handling of components
which would otherwise require
a human worker to be present
on the platform. Telecontrolled
robots could also be used to assist
surgeons in performing complex
surgical
procedures.
Other
examples of telecontrolled robots
include unmanned helicopters
and submarines. Unmanned
helicopters are being used for
aerial filming while unmanned
submarines are being used to
close oil and gas leakages. There
are several such ways in which
connectivity can extend the
application of robots.
What do you see as the future of
consumer or service robots? Is
this an area where we might see
a lot of traction in the next 5 to
10 years?
We will increasingly see
robots that can program
themselves.
We will also see robots evolve to
meet the needs of non-automotive
industries. Robots today are built
to be highly accurate. But not
all industries and applications
24
The market for consumer or
service robots has not taken off
in the way it was expected to. So
far, we have seen only limited
applications for consumer robots,
mainly in the form of lawn cutters
and vacuum cleaners. The main
applications for service robots
are in medicine and surgery. We
are also seeing the application
of robots in pharmaceutical
companies where robots are used
to move or blend samples in labs.
But this is still a small market. I
am not too optimistic about the
consumer or service robots market
taking off in the short term.
In your view, what does the robot
of the future look like?
I think we will increasingly
see robots that can program
themselves. At present, we have
robots that need to be trained and
programmed. We will see sensor
technologies, such as vision and
force-sensing, playing a bigger
role in helping robots do this.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
require high levels of accuracy.
For instance, a bakery may not
require 0.02 mm accuracy every
time a piece of bread needs to be
moved into an oven.
We will see robots
evolve to meet the needs
of non-automotive
industries.
Today’s robots are also relatively
heavy. But as new applications
of robots emerge in new industry
segments, we will need robots
made of lighter materials.
Accuracy, stiffness, weight,
speed and cost – these are all
features that will evolve as new
applications of robots emerge.

24.
The Third Dimension: The Implications of 3D Printing for Manufacturing and the Wider Economy Digital Transformation Review
The Third Dimension: The Implications of 3D
Printing for Manufacturing and the Wider Economy
printing is gaining significant attention and momentum.
Gartner predicts that worldwide shipments of sub-$100,000
3D printers will grow 49% this year1. In this edition of our
Digital Transformation Review, we focus on Stratasys, one of the leaders in
3D printing. We interviewed David Reis, CEO of Stratasys, to understand the
possible implications of 3D printing for the manufacturing industry and on to
the wider economy.
Interview with David Reis, CEO of Stratasys
3D Printing: Welcome to the Third Dimension
What are the key reasons for the increasing adoption of 3D printing?
David Reis
CEO of Stratasys
The 3D printing
industry has been around
for almost 25 years,
but started gaining
widespread adoption in
the last 4-5 years.
25
The 3D printing industry is not new. It has been around for almost 25 years
and has been evolving ever since. However, it started gaining widespread
adoption some four or five years ago when manufacturers realized the
potential of 3D printing for design and manufacturing. 3D printers costs
have also dropped dramatically: from $30,000 to $40,000 three or four
years ago to anywhere between $1,000 and $15,000, sometimes even
lower. 3D printers have also become far more user-friendly in terms of
software, man-machine interfaces and network connectivity.
1 Gartner, “Forecast: 3D Printers, Worldwide, 2013”, September 2013
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
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25.
Digital Transformation Review The Third Dimension: The Implications of 3D Printing for Manufacturing and the Wider Economy
Exhibit 1: PUMA Reduces Its Prototype Creation Time by 75% With 3D Printing
PUMA, a leading sports apparel brand, aims to become the most competitive, attractive and sustainable
sports-lifestyle company. This requires a strong focus on style and creativity, a challenge for a company
with geographically dispersed design and manufacturing. This involves extensive planning and multiple
product iterations, often carried out across several continents.
A lengthy design process
PUMA had an elaborate quality check process that was proving to be time-consuming and tedious.
The quality check process involved first designing the shoe and then sending the design for tooling.
However, the design and manufacturing teams were based in multiple locations and countries. This made
collaboration during the design process difficult. Once the tooling process was completed, a product
prototype was created, which would then get sent back to the quality assurance team – a process that
would often take several days. PUMA needed a solution that would reduce the time required to create
prototypes and improve collaboration across teams.
3D printing enabled more design iterations in less time
As a first step, PUMA switched from outsourcing its prototypes to installing in-house 3D printers at three
key sites – US, Germany and Vietnam. The 3D printers enabled the design teams at PUMA to create more
design iterations and prototypes in less time. Today, the 3D printers at PUMA produce a prototype of the
shoe sole for an initial design review, a second prototype for a construction review and a third model for
metal casting. Each team is now able to print the same prototype model for review discussions, thereby
helping them to communicate much more easily than before. These teams are now able to reference the
same physical model and reach a consensus on overall product design.
Benefits
With 3D printing as an integral part of the prototyping and quality check process, PUMA has been able
to reduce the time required to create prototypes by 75%. While creating a single prototype used to take
anywhere between three and four days, it now only takes a single day. 3D printing has also resulted in
fewer iterations and design mistakes.
26
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05

26.
The Third Dimension: The Implications of 3D Printing for Manufacturing and the Wider Economy Digital Transformation Review
How does 3D printing benefit
these applications?
There are three
main applications
for 3D printing in
manufacturing: Concept
Modeling, Prototyping
and Manufacturing
Tooling.
What are the key applications
of 3D printing?
There are three main applications:
Concept Modeling, Prototyping
and Manufacturing Tooling.
Concept Modeling allows
designers to perfect product
designs before taking them to
the next stage. In Prototyping,
the designer creates a functional
prototype in order to verify
and evaluate the design before
production (see Exhibit 1 on
PUMA). The third application,
Manufacturing Tooling, includes
the 3D printing of tools for
manufacturing, such as jigs, as
well as the production of enduse parts. For these applications,
3D printing is particularly
useful for productions with tight
deadlines and when a high level
of customization is involved.
In Concept Modeling, after a
product is designed, it can be 3D
printed and brought to a focus
group where design modifications
are discussed. Here, 3D printing is
used as a means of communication
to clearly convey concepts to
colleagues, marketers and clients.
3D printing enables
organizations to build
prototypes quickly inhouse.
In the Prototyping stage, 3D
printing can help detect product
flaws before they reach the
manufacturing stage and enable
improvements early in the
design process (see Exhibit 2 on
Xerox). By reducing the scope of
error before actual production,
manufacturers are able to avoid
material waste and save on costs.
3D printing enables organizations
to build prototypes quickly inhouse, thereby reducing the time
it takes for product completion.
always the most cost-effective
and efficient. For example, let’s
say you need to manufacture a
limited edition model of a car
and later switch to a different
model. In this scenario, you
need to switch around the jigs
used in the assembly process.
Here, 3D printing is often more
efficient in terms of time and
cost in manufacturing these
customized parts. By drastically
reducing the production time
for manufacturing tools, 3D
printing offers manufacturers
the flexibility to explore new
opportunities and respond quickly
to production needs.
3D printing tools and
parts prove to be highly
efficient and costeffective for customized
or short-run production.
In Manufacturing Tooling,
traditional technologies such
as injection molding are not
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
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27.
Digital Transformation Review The Third Dimension: The Implications of 3D Printing for Manufacturing and the Wider Economy
3D Printing’s Impact on
the Wider Economy
You recently mentioned that 3D
printing is playing a pivotal role
in bringing manufacturing back
onshore to Europe and the US.
Why do you believe 3D printing is
contributing to this phenomenon?
Outsourcing provides availability
of cost-effective labor, which is
extremely beneficial when large
quantities need to be produced.
In scenarios where a short-run
production2 is required for highly
customized products, tooling
costs tend to be higher. In such
instances, the labor advantage
becomes irrelevant due to the high
tooling costs. For customized or
short-run production – which
is a key trend in the industry –
the offshore model is not very
competitive.
In such scenarios, 3D printing the
tools and/or the parts themselves
proves to be highly efficient and
cost-effective while delivering
a high level of accuracy. This
highly-customized or short-run
production manufacturing can
therefore be brought back onshore
with 3D printing.
Exhibit 2: Xerox Slashes Costs Around Mold Creation By 91% Using 3D Printing
Xerox is the world leader in business process and document management services. For its package
manufacturing process, the company used thermoforming. This process involves heating a plastic sheet
to a high temperature to make it pliable. The sheet is then bent into a specific shape using a mold and the
excess portions are trimmed, resulting in a usable product. This process, which once was the norm, was
proving to be expensive and time-consuming.
Too many iterations with traditional manufacturing processes
In the past, Xerox used wooden molds for thermoforming. These wooden molds were created using
traditional manufacturing processes, resulting in several iterations before a satisfactory result could be
obtained. Moreover, geometric restrictions often made it impossible to improve the performance and
reduce the cost of the thermoformed part. The entire process would typically cost $1,200 and it would take
about a week to produce a single wooden mold. Xerox needed a process that would create molds faster
and at a reduced cost.
Using 3D printing to produce molds
Xerox was already using 3D printers to produce prototype parts. The company soon realized the potential
of 3D printers in producing fixtures and for assembly tooling in the manufacturing process. Using
3D printing, Xerox was able to do away with its expensive machining process and reduce the cost of
producing a single mold by 91% – from $1,200 to as little as $100. Xerox was also able to accelerate its
thermoforming process by drastically reducing lead time by 93%. Previously, the process would take a
week but now it could be completed in just four hours.
2 Short-run production connotes the manufacturing of a relatively low volume of parts or
products in comparison with high volume or mass production
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D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05

28.
The Third Dimension: The Implications of 3D Printing for Manufacturing and the Wider Economy Digital Transformation Review
Do you believe that the prospect
of bringing manufacturing back
to developed countries is pushing
governments to popularize 3D
printing?
I think this phenomenon is
certainly pushing governments
to embrace 3D printing. We are
already seeing governments
across the globe contributing to
the popularization of 3D printing.
For instance, the US government
has pledged funding of up to $60
million to the National Additive
Manufacturing
Innovation
Institute (NAMII), which is a
public-private partnership aimed
at transitioning 3D manufacturing
technology to the mainstream
US manufacturing sector. In
his 2013 State of the Union
address, President Obama spoke
about the industrial potential
of 3D printing and the return
of the tech-industry and other
manufacturing jobs to the USA.
The UK government, as part of its
Industrial Strategy, has committed
to an investment of £15 million
towards the development of 3D
printing projects. The EU, in its
future industrial policy, identified
3D printing as a top priority
for reviving the manufacturing
sector.
Nokia already allows
you to 3D print your
own customized cover
for selected mobile
phones.
A Multi-Dimensional
Future: The Road Ahead
for 3-D Printing
What are some of the possible
long-term growth areas for 3D
printing technology?
In my opinion, ten years down
the line, I see three main growth
drivers for 3D printing. The first
is Direct Digital Manufacturing
(DDM), where physical parts are
easily created, directly from 3D
CAD (Computer-Aided Design)
files. For this technology to be
widely used, we need to develop
both suitable hardware, which,
is robust and industrial grade,
and better materials. This is
important because 3D printed
products should functionally and
aesthetically mimic the products
manufactured using traditional
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
methods to ensure consistency
in design. This is crucial when
considering mechanical properties
and part reliability.
The second growth driver is the
Education sector. For example,
many UK schools are proposing
to introduce 3D printing as a part
of their curriculum. Ten years
from now, every high school and
university should have more than
one 3D printer.
The third growth driver is
Prosumers – people actively
customizing typically massproduced goods for their own
needs. This market consists of
engineers, designers, architects
and product manufacturers who
use 3D printing either for semiprofessional work or as a hobby.
Stratasys recently announced its
merger with MakerBot, which
has become a world leader in this
segment by targeting prosumers
with relatively low cost, easy-touse 3D printers.
3D printing can be most
effective when applied
to specific parts of the
manufacturing process.
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29.
Digital Transformation Review Companies to Watch: View from Silicon Valley
Companies to Watch:
View from Silicon Valley
By Sergi Herrero, CEO, L’Atelier BNP Paribas USA
TruTag: Beating counterfeit
Kcura and Relativity :
The human and financial consequences of
counterfeit medicines are devastating. Every year,
For every legal case, lawyers and corporations
spend countless hours reviewing previous cases
and legal documentation, which results in huge
time and money inefficiencies. ‘Relativity’ is a new
piece of software from Kcura that helps law firms
retrieve past cases and information relevant for
the purposes of civil litigation. It enables lawyers
to optimize their time management by using
machine-learning techniques that automate the
prioritization of documents for review. Kcura has
medicines with an edible microtag
there are 100,000 fatalities worldwide
on account of counterfeit medicines. The
pharmaceutical industry suffers losses of around
a trillion dollars each year. TruTag helps
tackle this enormous issue by providing a unique
edible microtag that is directly integrated into a
product’s infrastructure. Each edible tag is coded
and can be scanned with a Smartphone. This data
is sent to TruTag, which then provides a variety of
product information, such as the product strength,
expiration date and country of authorized sale.
TruTag was awarded the Technology Pioneer award
at the 2014 World Economic Forum in Davos for
its role in bringing more safety to the Internet of
Things.
30
Transforming how lawyers work
partnered with more than 75,000 customers
worldwide, encompassing both lawyers and
corporations. Kcura works with 95
100
of the top
law firms in the US and has also recently
started working with the US Department of Justice.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05

30.
UPS: Putting Analytics in the Driver’s Seat Digital Transformation Review
UPS: Putting Analytics
in the Driver’s Seat
U
PS is a global package delivery company headquartered in Atlanta,
USA. The company operates in over 220 countries with over 399,000
employees. In 2012, it had over 8.8 million customers with delivery
volume of some 4.1 billion. The company generated $54 billion in revenue
in 2012. UPS has been at the forefront of deploying advanced analytics in
optimizing its operations. Capgemini Consulting spoke with Jack Levis,
Director of Process Management at UPS.
Interview with Jack Levis, Director of Process
Management at UPS
Can you start by giving us a background to UPS and some of the unique
challenges that a logistics player of your size faces?
UPS is a business that thrives on managing complexity.
Jack Levis
Director of Process Management at UPS
A reduction of one
mile per driver per day
translates to savings of
up to $50 million a year.
Meeting our high levels of customer service entails complexity. We not
only aim to deliver every package on time, but we provide customers with
multiple service options to meet their needs. We even allow adjusting of
delivery choices while the shipment is in route. Executing this mission
means constantly orchestrating orders, adjusting route schedules and
following up on package deliveries with a massive fleet of ground and
air vehicles. This exercise generates huge amounts of data feeds, from
devices, vehicles, tracking materials and sensors. Each of these feeds
also comes with its own data format. Our goal is to turn that complex
universe of data into business intelligence.
Let me give you an example. We have about 55,000 package car drivers
in the US alone and around 106,000 drivers, globally, for our entire
vehicle fleet, and we deliver more than 16 million packages daily. When
you consider the fact that every driver at UPS has trillions of ways to
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
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31.
Digital Transformation Review UPS: Putting Analytics in the Driver’s Seat
run their delivery routes, the
number of possibilities increases
exponentially. However, not all
of these routes are necessarily
optimal in terms of fuel efficiency
and distance. Consider the fact
that a reduction of one mile
per driver per day translates to
savings of up to $50 million a
year. The question becomes: how
do you mine the sea of data from
our sensors and vehicles to arrive
at the most effective route for our
drivers?
Digitizing Operations
How did UPS start its digital
transformation journey?
Our digital journey started with
an early adoption of data and
analytics tools for improving our
operations. As our operations
became more complex and
distributed in nature, the focus
has been to improve business
processes, increase efficiency and
cut costs. We had been following
a descriptive1 and predictive
analytics2-based system for a
long time but what has recently
changed is our shift to prescriptive
analytics3. I can safely say that
UPS is one of the few companies
to effectively use prescriptive
analytics to gain insight for
successful optimization.
Our digital journey
started with an early
adoption of analytics
tools.
Yo u s p o k e o f p r e s c r i p t i v e
analytics playing an effective role
in route optimization. Can you
give us more details on its role in
overcoming your key challenges?
We have implemented a number
of prescriptive analytics projects
across our business but the one
that stands out from the rest is
our route optimization program,
based on prescriptive analytics,
called ORION (On-Road Integrated
Optimization and Navigation).
We formally started the ORION
project in 2003 and began to
roll out the system in 2012. We
are very serious about using
prescriptive modeling for our
routes. So much so, that we have
1 Descriptive analytics refers to a set of techniques used to describe or explore or profile any
kind of data.
2 Predictive analytics encompasses a variety of techniques that analyze current and historical
facts to make predictions about future, or otherwise unknown, events.
3 Prescriptive analytics represents the final phase of business analytics, which mines data to suggest
decision options to take advantage of a future opportunity or mitigate a future risk.
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D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
500 people dedicated to ORION.
In fact, ORION is probably one of
the largest prescriptive analytics
systems ever deployed.
As I mentioned earlier, effectively
mining the sea of data from our
sensors and vehicles to arrive at
the most effective route for our
drivers is a huge challenge. It is
here that our prescriptive analytics
system shines. It hides this large
amount of alternative routes
while giving drivers clear inputs,
thereby taking the guesswork out
of the equation. The best part is
that the system produces these
answers in as little as six to eight
seconds. The idea is not to make
big changes in driver routes. In
fact, the optimized route might
look very similar to the driver’s
normal route. However, the real
benefit lies in the distance it helps
reduce – a quarter mile shaved
here and a half mile shaved there.
So, the system keeps looking for
ways to deliver minute savings
throughout the day.
Our analytics system
enabled UPS to
eliminate 85 million
miles driven per year.

32.
How Analytics Transformed
Operations at UPS
The Logistical
Complexities at UPS
Business Beneﬁts
of Analytics
55,000
Reduction of
package car drivers
in US alone
85 million
miles driven/ year
106,000
drivers globally
8 million fewer
gallons of fuel used
16 million
packages daily
One driver = trillions of ways
to run delivery routes
Shaving just one mile/ driver
= $50 million
savings a year
The challenge: Arriving at the
most optimal route for drivers
Reduction in engine idling
time by 10 million
minutes
Reduction in carbon
footprint by 6,500
metric tons
C02
Analytics has changed the way
UPS functions
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33.
Digital Transformation Review UPS: Putting Analytics in the Driver’s Seat
What have been the tangible
benefits that you realized by
deploying analytics systems in
your operations?
The deployment of descriptive
and predictive analytics systems
several years ago enabled UPS
to reduce 85 million miles driven
per year. That equates to over 8
million fewer gallons of fuel used.
Prescriptive analytics adds to
those gains.
We were also able to reduce engine
idling time by 10 million minutes.
This led to significant savings
in fuel consumption – around
650,000 gallons – and we have
reduced our carbon emissions by
over 6,500 metric tons.
Now adding to this, deploying
efficient prescriptive analytics
systems has enabled UPS to
eliminate miles from our routes
in 2013. The surprising fact is that
we have realized this additional
benefit with only 18% of UPS
delivery routes deployed.
As we deployed
analytics, we realized
we could not continue
relying on old metrics.
34
Implementing and
Measuring Digital
What is your approach to
launching analytics initiatives?
The business drives technology at
UPS. We don’t look at initiatives
as ‘analytics projects’, we look at
them as business projects. Before
launching an initiative, areas
where the greatest business need
exist are evaluated. We then look
at the best way to meet those
needs, and often analytics is
needed.
Our goal is to make business
processes, methods, procedures,
and analytics all one in the same.
For the front line user, the use of
analytics results becomes just part
of the job.
With systems that require
large process change, we spend
significant effort ensuring
that the change can actually
be attained. This often requires
iterative prototyping so that
we can successfully achieve
the business gains.
We followed this approach for
our prescriptive analytics system,
ORION. We tested the system
over two years. We had to prove
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
that the program would, indeed,
measurably impact costs. Not
only were the numbers were
impressive, but the fact that
front line operators and drivers
were supportive got everyone’s
attention. That helped convince
our senior management to test the
program at other locations across
the country. After testing the
system in 15 different locations,
final approval for broad-based
deployment of the initiative
across the company was given.
As part of implementing analytics
across your operations, did you
have to change the way you
traditionally looked at your
metrics?
An important thing to note about
analytics systems – especially
prescriptive analytics – is that
change management is required.
New ways of operating are
being produced and front line
employees must be educated and
supported. This means changing
behavior.
As we deployed analytics, we
realized that we often could not
continue to measure a new way
of doing business with the same
old metrics. So, we had to come
up with new metrics that enabled
effective measurement.

34.
UPS: Putting Analytics in the Driver’s Seat Digital Transformation Review
In the past, we used metrics that
showed incremental change from
year to year. We looked at things
such as number of deliveries made
per hour, or the amount of time
expended for a route vs. a work
measurement standard. Those
used to be the measure of success
for deliveries. But now, after
implementing our prescriptive
analytics system, the metrics have
become far more sophisticated
and nuanced. We have moved
from looking at lagging indicators
that focus on end results only to
looking at leading indicators.
We created balanced scorecards
that guide the front-line operators
on areas to focus. The elements
have been carefully selected and
weighted. The balanced scorecard
measure correlates highly with
true business results.
The key to managing
change in roll out of
digital initiatives is
to take a collaborative
approach.
What were some of the
biggest issues UPS faced when
implementing its prescriptive
analytics program?
As I mentioned earlier, our
analytics system has been built to
tell us the best delivery route for
a particular day. If you consider
that there are going to be 55,000
different drivers, which means
55,000 different routes the model
has to work for – that is a very
hard model to build. We would
have our parameters and all the
dials tuned and the answer would
be great on Tuesday. But the same
system with Wednesday’s data
would not work. So, definitely
the model needed to have a lot
of heuristics, math, and business
rules built in. That was a big
challenge.
We spent years making our data
better and changing the algorithm
so it wasn’t so sensitive to changes
in data. We had to have an
algorithm and process that didn’t
take a rocket scientist to use. In a
step-by-step matter we tested not
only that the algorithm could be
created, but that we could transfer
the knowledge to the front line.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
Operational Excellence
Implementation of digital
initiatives entails large-scale
change management. How did
you convince drivers who relied
on traditional route planning to
shift to new analytical tools?
We adopt a highly collaborative
approach with our drivers in
implementing these initiatives.
We are acutely aware that
our drivers aren’t automatons
who rely on insights from the
analytics system. When you have
a prescriptive analytics system,
usually problems arise because of
issues with data. Counteracting
bad data requires collaboration
with our drivers. This is why we
have built-in buffers into our
model where we acknowledge
that the system is not perfect and
that drivers have the opportunity
to identify flaws. We let our
drivers exercise their discretion.
We tell them: if the model has you
doing something that won’t meet
a customer’s demand, do what’s
right.
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35.
Digital Transformation Review UPS: Putting Analytics in the Driver’s Seat
We now want to
use our prescriptive
analytics system to offer
innovative services to
our customers.
It is because of this collaborative
approach that our drivers
are included in the process,
which is why there hasn’t been
much resistance to change
when implementing analytics
initiatives. In many cases, drivers
have said “my stress is reduced”.
This is because the system makes
thousands of small decisions
for them, freeing up the driver
to make the larger decisions of
servicing the customer.
With the significant shortage of
digital skills across industries,
how does UPS acquire its analytics
talent?
Our challenge hasn’t been
around identifying analytics
talent as much as it has been in
determining the best way to train
the hundreds of business people
36
who are using these tools. For this,
we provide role-based training
that teaches employees how to use
the analytics system. When fully
deployed, the system will offer our
front-line supervisors and drivers
the tools to test scenarios and
make tradeoffs. They don’t need
to be data experts, but they need
to understand which parameters
im p a c t w h i c h p e r f o r mance
objective. Drivers are graphically
shown how the algorithm is
deriving different parts of the
route so they can compare it with
their own experience and attempt
to beat it.
Our challenge hasn’t
been around identifying
analytics talent as
much as it has been
in determining the
best way to train the
hundreds of business
people who are using
these tools.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
In our analytics team, we also
have people with business
backgrounds who understand the
overall system objectives from
an organizational perspective.
So, while an analytics person
will sift through algorithms, the
software engineer will translate it
into code, the business person will
ensure that the solution meets the
desired objectives.
Digital Future
Looking ahead, what are some
of the new digital initiatives UPS
is working on to further drive
operational efficiency?
Our current analytics systems
are still largely static in nature
– we need to change that. They
do not account for unexpected
situations, such as traffic delays
or accidents. In such scenarios,
our drivers are expected to take
a discretionary call. In future, we
anticipate moving from a static to
a dynamic manifest. For this, we
are trying to make our plans more
flexible and with provisions for
real-time updates.

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UPS: Putting Analytics in the Driver’s Seat Digital Transformation Review
How do you perceive analytics
adding further value to route
efficiency at UPS?
Our current focus has been in
trying to reduce the distance
covered during each delivery.
We will continue to do that.
But we also want to use our
prescriptive analytics system to
offer more innovative services to
our customers. We have already
opened up our internal supply
chain to our customers to enable
them to make specific pick-up/
drop requests.
As we go in to the future, we hope
to spin-off many new services
based on real-time updates in
the system. We want to be able
to offer customers to make lastminute requests. Calculating
the costs of last-minute request
changes from customers is
another aspect that an analytics
system can deliver. This would
enable us to possibly reschedule
or re-prioritize deliveries based on
several scenarios.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
Our goal is to move
from our current static
analytics systems to a
dynamic manifest.
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37.
Digital Transformation Review An end to data poverty: How HMRC’s big data solution is helping transform the UK’s tax system
An End to Data Poverty: How HMRC’s Big Data
Solution is Helping Transform the UK’s Tax System
er Majesty’s Revenue and Customs (HMRC) is the UK’s tax authority.
HMRC has been one of the early adopters of big data analytics in
order to combat tax and welfare fraud. Capgemini Consulting spoke
to Mike Hainey, Head of Data Analytics at HMRC, to understand how a public
sector department can benefit from big data.
Interview with Mike Hainey,
Head of Data Analytics at HMRC
Can you start by giving us some background on analytics at HMRC and
how the move to a big data solution started?
Mike Hainey
Head of Data Analytics at HMRC
Prior to our Big Data
analytics deployment,
it used to typically take
anywhere between a
few weeks to few months
to set up a new way of
looking at data silos.
38
HMRC, or Her Majesty’s Revenue and Customs, was created out of the
merger of two departments – the Inland Revenue and Her Majesty’s
Customs and Excise. One of the key rationales for the merger was that
by bringing information together from both departments, we would
gain better insights and provide better service. However, while the fraud
and error detection systems were there, they largely existed in silos.
For instance, we had separate systems for VAT fraud as well as for selfassessment tax returns. To compound matters, these systems weren’t
integrated. Therefore, if we wanted to assess risk, we had to dip in and
out of these silos and have highly skilled people connect the dots in the
different information sets. We were also limited in our ability to play
with data. It used to typically take anywhere between a few weeks to a
few months in order to set up a new way of looking at data silos. So while
the departments had been brought together to improve matters, we were
still missing a single view of the customer.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05

38.
An end to data poverty: How HMRC’s big data solution is helping transform the UK’s tax system Digital Transformation Review
Leveraging Big Data
Can you tell us more about the
big data solution implemented by
HMRC?
Our big data solution to solving the
data paucity challenges with our
traditional systems was ‘Connect’.
‘Connect’ starts by taking in
data from over 28 different data
sources. It then cross-matches
this data over a billion internal
and third-party items. These
include items such as property
purchases, tax returns, loans,
bank accounts and employment
data. By doing so, the system
can uncover hidden relationships
across organizations, customers,
and their associated data sources.
Once relationships are uncovered,
the system graphically visualizes
them enabling tax investigators
to effectively interrogate and
navigate through the data. The
next step involves HMRC analysts
who produce target profiles and
models that assess the risk and
generate cases for investigation.
Finally, these are fed into the
HMRC’s case management system
for tax specialists to undertake the
appropriate intervention.
In a way, the data visualization
acts like the ‘Babel Fish’. It enables
an effective communication
between the data analyst and the
tax specialist who work together
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
on specific areas of concern to
identify risk characteristics and
collaboratively develop complex
risking models. It significantly
helps us to profile and visualize
the data in an effective way.
Our Big Data solution
‘Connect’ takes in
data from 28 different
data sources and crossmatches this data over
a billion internal and
third-party items.
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39.
Digital Transformation Review An end to data poverty: How HMRC’s big data solution is helping transform the UK’s tax system
How do you manage the data
volume?
Volume is indeed a major issue
as we are talking about over a
billion records. The challenge is
that it is quite dynamic - we have
information coming in regularly
through tax returns or thirdparty data that we acquire. Our
intent is to have the most up-todate view of data made available
to the 150 Connect analysts who
apply profiling and modeling
techniques and the 3,200 tax
investigators who have access to
the visualization tool. The more
accurate and up-to-date that
view is, the more beneficial it is in
terms of decision-making.
How big a challenge is privacy for
the data analytics team?
We take privacy issues very
seriously. We are tightly bound
by government rules. We use
a variety of data sources, all
that we are legally entitled to
see and utilize. All data used is
proportionate and appropriate in
tackling the range of risks and
issues that HMRC faces. We apply
rigorous audit against people
who use the ‘Connect’ system
and we have strong controls on
movement of data from ‘Connect’
to other environments.
40
Our initial pilot
helped uncover £330
million fraudulent VAT
repayments enabling
us to make a compelling
case for broader
investments.
What is the working model that
you have with the Enforcement
and Compliance team? How
is analytics implemented in
practice?
Our analytics solution provides
a very high-level view of risks.
Based on this analysis, we dig
further and go to operational
delivery where we can identify
some population and the potential
risk there. The next step is to
actually design an intervention
process; this covers a broad
range of approaches from light
touch advisory communications
through to face-to-face enquiry.
We need to devise methods to
tackle this risk in collaboration
with our front-line audit
workforce and tax inspectors.
Our analytics solution flows and
informs at strategic, tactical and
operational levels.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
Garnering
organizational support
How were you able to convince
the leadership to set up an
analytics team and invest in the
big data solution?
Like most good things, we started
small. We initiated a pilot to check
the potential of analytics solutions.
The pilot started to generate real
outcomes very quickly. The pilot
helped uncover £330 million
fraudulent VAT repayments.
And this was from a subset of a
subset of data. This allowed us
to build a strong business case
that we took to our leadership.
The insights that we could draw,
and the amount of fraud it helped
uncover, basically compelled us
into operationalizing the pilot
into a broad rollout.
For total investments
worth around £45
million, ‘Connect’ has
helped deliver around
£2.6 billion as of April
2013.

40.
HM Revenue & Customs:
the Big Data Approach
Key challenges
billion internal and
different
data sources
third-party records
ROI
Pilot helped uncover
‘Connect’ was built
at an initial cost of
£330 million
fraudulent VAT
repayments
£45 million*
It delivered
£2.6 billion
as of April 2013
The analytics team
3 skill sets blended together
Operational
research
Data
specialists
Frontline
tax expertise
The next step
Using Big
Data and analytics
to improve customer experience
*including running costs over 5 years
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Digital Transformation Review An end to data poverty: How HMRC’s big data solution is helping transform the UK’s tax system
What about additional
investment? How do you get
funding on an ongoing basis?
Getting the Skills
A typical challenge in public
sector projects is that most
investments are made in a builddeploy-forget model. However, in
the case of the big data solution
we deployed, we were pretty clear
right from day one that this is a
system that needs to evolve and
requires nurturing. One of the big
factors that encouraged ongoing
investments in the solution was
the impressive ROI we realized.
We deployed ‘Connect’ at an
expense of around £45 million;
this includes running costs
over five years. Not counting
additional investments, it has
helped us deliver £2.6 billion as
of April 2013. This is a fantastic
return and helps immensely in
influencing key decision makers
when bidding for additional
investment.
You are running a dedicated
analytics team. What was the
rationale behind the creation of
this team?
Data and business
specialists deliver best
results when they work
together.
42
At HMRC, we have always
employed analytics talent for a
long time. However, most of it
was dispersed across departments,
working largely in silos, which
compromises efficiencies. Over
the course of the pilot that we ran,
we realized that data and business
specialists delivered best results
when they worked together.
These teams were constantly
working with one another on new
innovative ideas and exploiting
the data.
So, when we decided to launch
our big data solution – ‘Connect’
– we realized that for us to be
effective, we needed to bring
people from different analytical
areas to work together within one
community. We blended three
skill sets together – operational
research, data specialists and
frontline tax expertise. This
combination has proved effective
in delivering results and provided
practical insight to evolve our big
data solution.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
How do you address the scarcity
of digital skills?
Big data is a hot topic, and there
is a growing skills shortage. We
had to rely on finding talent
both internally and externally
to drive the Connect solution.
Internally, we identified people
and up-skilled them. Training
is absolutely essential in our
team. For example, we ensure
that people who use ‘Connect’
are put through a comprehensive
one-year training program on all
aspects of the tool and broader
analytical skills. From a more
long-term perspective, we are
creating links with academic
institutions with a view to support
education programs and position
HMRC as a leading employer of
data analytical talent.
We blended three
skill sets together –
operational research,
data specialists and
frontline tax expertise.

42.
An end to data poverty: How HMRC’s big data solution is helping transform the UK’s tax system Digital Transformation Review
Preparing for the Future
Going forward, what other
challenges do you foresee?
A lot of the intelligence that our
solution provides is a function
of how optimally we have linked
the data. A big challenge for us is
to constantly evaluate different
ways of linking up the massive
amounts of data that we have to
deliver the optimum results.
As digital becomes more
pervasive, there are bound to be
newer types of fraud. What is
your view on emerging types of
fraud which do not have historical
data?
I agree, there are new types of
digital frauds coming up and
keeping up with them is indeed
a challenging task. We rely on
strong intelligence systems to
acquire data on such frauds.
Obviously, unlike traditional
fraud, we don’t have historical
data to analyze them thoroughly.
So we look at very specific datasets
to understand and evaluate the
potential impact of emerging
types of fraud. It is a constant
challenge. By constantly honing
our intelligence systems, and then
reacting to their output, we hope
to stay ahead of digital fraudsters.
Once our intelligence gives an
indication that there is something
we need to be concerned about,
then a whole range of techniques
can be deployed to actually test
that.
What do you foresee as the future
of analytics in HMRC?
The big data solution, Connect,
was built within the Enforcement
and Compliance directorate of
HMRC. The objective was to better
target customers for compliance.
We have proved that it can work
extremely well. Our ambition now
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
is to look at analytics in a broader
sense. For instance, how it can
be used to improve customer
support and end-to-end lifecycle
of customer handling. So the
task going forward is to leverage
analytics beyond enforcement
and compliance. And big data and
analytics will drive this transition.
We now want to look
at analytics in newer
areas such as usage
in improvement in
customer support and
end-to-end lifecycle of
customer handling.
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43.
Digital Transformation Review Global Brain Power: edX and the Transformation of Learning through Big Data
Global Brain Power: edX and the Transformation
of Learning through Big Data
dX is a not-for-profit organization, founded by Harvard and the MIT
in May 2012, which aims to expand access to education for everyone
while improving educational outcomes on campus and online.
edX’s online learning platform recently launched a series of Massive Open
Online Courses (MOOCs), which have sparked widespread interest. We spoke
to Anant Agarwal, President of edX, to understand edX’s objectives and
activities as well as the future of education.
Interview with Anant Agarwal,
President of edX
The Journey So Far
Anant Agarwal
President at edX
A key objective of edX is
to improve the learning
experience on campus
by understanding how
people learn.
44
What was the rationale behind the creation of edX?
edX has been created with two objectives in mind. The first is to
give access to high-quality education to as many people as possible.
We aspire to reach a billion people over the next decade. The
second objective is to improve the learning experience on campus
by understanding how people learn. We conduct research on how
technology can transform learning and the way teachers teach on
campus.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05

44.
Global Brain Power: edX and the Transformation of Learning through Big Data Digital Transformation Review
Can you give us an idea of the
level of success you have seen so
far?
EdX has grown rapidly since its
launch a year-and-a-half ago.
The number of enrollments from
our inaugural course – on circuits
and electronics – has been
phenomenal. Nearly 155,000
students from 162 countries
signed up for the course. This
is more than the total number of
MIT alumni across the university’s
150-year history. Currently, we
have over 1.4 million users and 2.3
million course enrollments from
around the world. Our learners
vary from those who want to
audit a course to those who want
to obtain a certificate (25 to 30%).
Approximately 7% of the overall
pool achieves a certificate.
Nearly 155,000
students signed up for
the inaugural course
– more than the total
number of MIT alumni
across the university’s
150-year history.
What are the courses that you
offer on this platform?
We have extended our course
offerings across a wide range of
disciplines. From science to art
to technology, you can find it all
on edX. The courses now range
from fields such as neuroscience
to Chinese history, from American
poetry to linear algebra.
We now have 29 universities as
members of our group of partner
universities, collectively called
the ‘xConsortium’. And we keep
adding more universities.
We aspire to give
access to high-quality
education to a billion
people over the next
decade.
Recently, the French Ministry of
Higher Education announced that
France is creating a national online
learning platform called ‘France
Université Numerique’ based on
the open source platform from
edX. Over 100 higher education
institutions throughout France
are expected to participate in this
initiative. Similarly, a consortium
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
of leading Chinese universities
selected the open source platform
from edX to power China’s largest
online learning portal, XuetangX.
25 to 30% of our
learners want to obtain
a certificate. 7% of the
overall pool achieves a
certificate.
Applying Analytics
to Transform Higher
Education
You mentioned collecting and
analyzing data to enhance the
overall learning experience. What
type of data do you typically
gather?
We look at students’ clickstreams,
which are essentially recordings
of when and where users click on
a particular page. We record every
click that a student makes as
they navigate through a course’s
resources, including assessments,
e-texts, and online discussion
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45.
Digital Transformation Review Global Brain Power: edX and the Transformation of Learning through Big Data
forums with their fellow students.
Then, we also analyze students’
homework, exam and lab scores,
and student comments on
discussion forums. We also collect
users’ demographic data such as
age, region, degree status and
reason for taking a course when
they register on edX.
We record every click
that a student makes as
they navigate through
a course’s resources,
including assessments,
e-texts, and online
discussion forums with
their fellow students.
This demographic data helps us
customize courses according to
the age bracket. We also observe
the number of attempts students
have made before they got an
exercise right, and if they got it
wrong, what alternatives they
used to try and find a solution.
46
For instance, did they go to the
textbook, go back and watch the
video, or did they go to the forum
and post a question?
Analyzing behavior patterns of
students helps us understand what
solutions students turn to when
they are faced with a problem.
This helps us focus on prioritizing
student-preferred solutions over
others. There are over 1.4 million
students on edX, so collecting all
this information creates a large
dataset. We analyze all this big
data to gain insights into how
students learn and collaborate,
and then aim to use these insights
to enrich the quality of courses we
offer.
What are the preliminary insights
that you have already gathered
from all this data?
We found that more than half
of the students in our inaugural
circuits and electronics class
started working on their
homework before watching video
lectures. It appears that students
get more excited about learning
when they try to solve a problem
– it’s almost like a puzzle. We are
now looking at whether professors
should assign homework or in-
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
class assignments before the
lecture, instead of after.
We also found that a student who
worked offline with someone else
in the class – or with someone
with expertise in the subject –
scored almost three points higher
than someone working alone.
Basically, collaborating with
another person, whether novice or
expert, strengthens learning.
Analyzing the Big
Data from the students’
clickstreams allows us
to gain insights into
how students learn and
collaborate.

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Digital Transformation Review Global Brain Power: edX and the Transformation of Learning through Big Data
Are you experimenting with new
forms of campus learning based
on these findings?
Our research findings indicate
that classroom sessions should
focus more on collaborative
problem solving, rather than on
understanding the basic concepts
of the course. The University
of California, Berkeley, among
other xConsortium members,
is already experimenting with
this “flipped classroom” method
of teaching. In this emerging
format of classroom learning,
students learn new content online
by watching video lectures,
and studying the background
materials. The classroom learning
focuses on solving problems
under the guidance of the
professor and through interaction
with other students, thus creating
a collaborative environment to
strengthen learning.
A key finding is that
classroom sessions
should focus more on
collaborative problem
solving, rather than on
understanding the basic
concepts.
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Online Learning through
MOOCs
MOOCs have seen tremendous
success in recent times. Is
it possible that MOOCs will
cannibalize the traditional
residential education system?
MOOCs will not replace a
conventional on-campus
education. But we do foresee a
revolution in the way education
is implemented on campuses;
especially with the increasing
use of digital technologies in
traditional classrooms. We believe
the future of classrooms will be
a blend of traditional and online
learning approaches. Some of our
early research around these socalled blended or hybrid courses
suggests that learning outcomes
improve when they are used on
campuses. For instance, teachers
can leverage the edX platform
to make their courses more
accessible by referring students
to specific online courses to
supplement their skills and stay
up-to-date. Overall, I think digital
learning will help improve both
on-campus and online learners
globally.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
MOOCs will not
replace a conventional
on-campus education.
But we do foresee a
revolution in the way
education is implemented
on campuses.
Being a not-for-profit venture,
how do you plan to make edX
sustainable?
We are establishing revenue
models across both the B2B
and B2C segments. In the
business-to-business segment,
edX is establishing a business
model by providing platform
support and services to a
wide variety of organizations
including corporations that
use our platform for internal
training and intergovernmental
organizations like the IMF and
even governmental institutions
like France’s Ministry of Higher
Education.

48.
Global Brain Power: edX and the Transformation of Learning through Big Data Digital Transformation Review
In the business-to-consumer
segment, edX is conducting a
pilot around the student identity
verification process. The idea is
to offer ID-verified certificates
to students that complete a
course. The new functionality
uses webcam photos to confirm
student identity and provides a
linkable online certificate for a
fee.
Early research
suggests that blending
traditional and online
education improves
learning outcomes.
To make it possible for our partner
universities to offer more courses
on edX, we work on the basis of
an equal revenue share with them.
These initiatives are resulting in a
self-sustaining business model.
Crystal Gazing: Looking
Ahead
Can you tell us more about the
new initiatives that you plan to
launch in the coming years?
We decided to partner with
Google and announced a new
initiative called ‘mooc.org’. The
idea behind this platform is to
increase our reach to more topquality universities, corporations,
NGOs and governments.
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
Mooc.org will be a new portal
for universities not already part
of the xConsortium to build and
host their courses for a global
audience. Google will work on the
core platform development with
several edX partner institutions,
including MIT, Harvard, Stanford
and UC Berkeley. In addition, edX
and Google will collaborate on
research into how students learn
and how technology can transform
education online and on campus.
The portal will be particularly
helpful for institutions that intend
to incorporate blended learning
into their curriculum, which is
a mix of classroom and online
learning.
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49.
Digital Transformation Review Global Brain Power: edX and the Transformation of Learning through Big Data
Organizations are facing a severe
shortage of digital skills. Do you
think MOOCs can help companies
alleviate this problem?
Yes, I think so. There are two
main hurdles to improving the
skills of an active workforce.
The first is the unavailability
of the right courses. To tackle
this, we are currently working
with several organizations to
enable our platform to offer
corporate training sessions. For
instance, we collaborated with
the International Monetary Fund
(IMF) to offer online courses on
economics and finance. The IMF
designed these courses and edX
provided the hosting support and
associated educational services.
The second hurdle is logistics.
Currently, most executives have
to travel and stay for about one
or two weeks to take a course.
This can serve as a deterrent to
learning. What we intend to do,
instead, is to allow employees to
be able to take courses without
h a v i n g t o t r a v e l , w i t h o ut
disruption in their lives and jobs.
We have already created solutions
for this arrangement and we will
make relevant announcements in
the future.
I also expect that as MOOCs
become more accepted, companies
will become more comfortable
50
with employees trained by this
technology. For instance, when
employers hire candidates with
digital skills gained from MOOCs
and start to see success, they will
be more likely to give value to
MOOCs certificates.
MOOCs can help
companies alleviate the
shortage of digital skills.
How do you foresee education
changing over the coming years?
This is a time of disruption and
experimentation in education.
Things are going to be moving
very quickly. In the short term, I
anticipate on-campus universities
to increasingly use digital
technologies and MOOCs as part
of their curriculum.
In the long term, I visualize a
movement towards what I call
‘continuous education’. This
would question an existing
model – for instance, why should
students attend university for
four years at the beginning of
their careers? As part of the new
arrangement, before students go
to university, they would take
D I G I TA L T R A N S F O R M AT I O N R E V I E W N° 05
a few online courses, perhaps
from the same university. Then
the y w o u l d e x p e r i e n ce oncampus study, attend blended
courses, interact with professors
and conduct research. After
graduating from university they
would undergo ‘continuous
education’ by taking online
courses as alumni from the same or
another university. For instance,
we have started an initiative
called ‘BostonX’ in partnership
with the city of Boston to create
learning centers in neighborhood
community centers where people
can meet, take courses online
from local universities. Professor
and student volunteers may visit
these community centers and
lend support so that continuing
learners can take courses in
their interest areas and form
communities.
This is a time of
disruption and
experimentation in
education.